We use cookies for analytics and to improve our site. We have a new Cookie Policy and have also updated our Privacy Policy. You agree to our use of cookies and our privacy policy by closing this message box or continuing to use our site. To find out more visit our
privacy policy

EPA Emissions Transport Rule Begs for Legislative Fix

07.15.10

The market's response to the U.S. Environmental Protection Agency's (EPA) proposed rule to control interstate transport of power plant emissions has been swift and certain. SO2 allowance prices immediately fell to less than $10/ton, while NOx allowance prices fell from $465/ton the day before EPA's announcement to around $200/ton three days later. Both markets continue to trade at or near historic lows.

Market participants are reacting to EPA proposals to reject or severely limit the use of banked allowances from the current programs and EPA's inclusion of restrictions on interstate trading of allowances under the proposed Transport Rule.

Evolution Markets Managing Director Peter Zaborowsky tells the power industry news service SNL Energy that the proposed rule -- and the market's reaction -- point to the need for Congress to step in. He highlights a legislative proposal (S. 2995) sponsored by Senators Tom Carper (D-DE) and Lamar Alexander (R-TN) that would mandate large cuts in SO2, NOx, and Mercury emissions from large stationary sources, but use the existing construct of the Acid Rain and NOx trading programs and maintain the flexibility of interstate trading.